March 2011
A recent change to the Building and Construction Industry Security of Payment Act (1999) (SOP Act) gave Building Sub Contractors a direct right against Principal Contractors for payments due to Sub Contractor.
Overcoming many of the problems of delay and insolvency which we have seen in the Building Industry, the SOP Act now allows a Subcontractor to serve a Payment Withholding Request on the Principal Contractors, who must now hold back any money owed from the Owner or Principal until an Adjudication Determination issues. The obvious advantage of this approach is to retain money and to prevent it disappearing if the Principal Contractor refused to pay or becomes insolvent.
The amendment to this Act commenced on 28 February 2011. We have seen some conflicting decisions in the area, but it is an important change for a Sub Contractor. If you find yourself in a position where, as a Subcontractor, you are at risk of payment we would be happy to discuss your position with you.
Matt Howlin and Jodie Jamieson can provide advice on this legislation.